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The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization

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The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization Main Report FINAL REVIEW DRAFT AUTHORS Anthony H. Cordesman and Abdullah Toukan March 22, 2017 Please address comments and suggestions to [email protected] and [email protected] Photo credit: FAYEZ NURELDINE/AFP/Getty Images Cordesman/Toukan MENA National Security Economics 22.3.17 ii The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization Final Review Draft Anthony H. Cordesman and Abdullah Toukan March 20, 2017 Please address comments and suggestions to [email protected] and [email protected] Cordesman/Toukan MENA National Security Economics 22.3.17 iii The economics of national security in the Middle East and North Africa (MENA) region have changed dramatically since 2001. Counterterrorism, counterinsurgency, and internal security have emerged as having the same priority as military forces, and the rise of non- state actors, the use of proxies, and the increase use of asymmetric warfare have changed the nature of warfighting as well. Nuclear and missile threats are not new to the region, but they are a rising threat, and one that affects the cost and shape of many of the region’s military forces. Internal security has also increased in priority and in cost. The 9/11 attacks made it clear that violent Islamist extremism posed a major threat inside and outside the region, a threat reinforced by the al Qaeda attacks in side Saudi Arabia in 2011, and by the emerge of ISIS and its claims of creating a “Caliphate” in Syria and Iraq in 2011. At the same time, the major political upheavals that began in 2011 have shown that national security faces a critical threat to internal stability growing out of failures to provide effective governance and development, and that regional states need to pay far more attention to the needs of their peoples, to the impact of massive population growth, to the need to create jobs and higher levels of income, and to dealing with social change. The end result is that the economics of national security now go far beyond spending on military forces. They have three critical elements: • Military security: The economics of creating military forces that can defend and deter given nations, where the size of spending is secondary to the effectiveness and the efficiency with which military budgets are spent. • Internal security: The economics of dealing with terrorism and challenges like violent Islamic extremism, ethnic and sectarian differences, tribal and regional tensions, and the rise of armed or violent non-state actors—including forces like Hezbollah. • Internal stability: The economics of providing the levels of governance, employment, services and infrastructure, education, medical services, and the other key elements of internal stability necessary to avoid mass uprisings, and trigger popular support for internal security threats. This analysis explores the resulting trends in regional and national security spending in the Middle East and North Africa (MENA) region using a variety of sources and metrics. It highlights trends within the region and by country, examines leading national efforts, and raises key issues regarding burden sharing. The analysis shows that virtually all of the countries in the region face serious problems in coping with the costs of ongoing conflicts and improving internal stability that place serious burdens on their economies. It also shows that while some regional players—like NATO Europe—may be spending too little, but that many MENA nations—including some of its wealthiest petroleum exporting states—may well be spending more than their economies can sustain. The arms race in the Gulf region is particularly expensive, and has pushed several Gulf States to extraordinary spending levels as a percent of their GDP. By some estimates, it Cordesman/Toukan MENA National Security Economics 22.3.17 iv has made Saudi Arabia increase its national security spending to levels that rank third or fourth in the world. Virtually all regional states that are not actively at war are still spending far more their GDP on military forces than the 2.0% goal set by NATO, and many pay several times that percentage. National security economics have become a critical issue for regional governments that must now pay for steadily more expensive military forces, internal security forces, and efforts to improve internal security. At the same time, this analysis warns against taking any given source of data as reliable, and focusing on a single metric like the percentage of GDP being spent on defense to estimate the national level of effort or "burden." The data given countries report on military expenditures vary sharply in reliability and inclusiveness, no one metric explains levels of effort or their effectiveness, and spending may or may not produce effective forces tailored to real world national and regional security requirements. This raises critical issues about efforts to assess the economics of "burden sharing," particularly when they use essentially meaningless and misleading metrics like military spending as a percent of GDP. The key issues at both a national and alliance level are what levels of spending buy effective forces, deterrence, and warfighting capabilities. A given percentage of GDP says nothing about the effectiveness of given levels of military spending, of the ability of a country to fund them and meet its other security needs, or how alliances and collective security efforts should best be structured to meet national and common needs. It also makes no distinction between the major regional powers—like Egypt, Jordan, Saudi Arabia, the UAE, and potentially Iraq—that must underpin any major Arab collective security effort and the smaller and often poorer states that cannot match them in economies of scale and purchasing power; the role that small but exceptionally rich states like Qatar should play; or the ways regional and outside powers like the United States, Britain, and France can best use their resources to achieve synergistic and effective results. The analysis also warns against focusing on military spending to the exclusion of national police, counterterrorism, and other internal expenditure data, which are lacking as a separate set of data for most MENA countries. In many cases, military expenditures are combined to some undefined degree with internal security spending. In others, reporting only cover military and paramilitary forces. There are insufficient data to report—and analyze—on this critical aspect of MENA national security spending. Most previous reporting and assessment of national security spending also ignores the extent to which spending on national stability has become a key issue since the political upheavals and new cycle of conflicts that began in 2011. It is all too clear that internal stability is the key prerequisite for effective military and counterterrorism efforts, although there is no clear way to estimate the cost and comparative size of such efforts. Accordingly, the analysis includes three separate Annexes that cover every MENA state, that highlight what is known about some of the key metrics shaping internal stability, and that can be compared with the size and burden of military and other national security spending. Cordesman/Toukan MENA National Security Economics 22.3.17 v TABLE OF CONTENTS ESTIMATING)THE)SIZE)OF)MIDDLE)EAST)AND)NORTH)AFRICA)(MENA))MILITARY)AND) SECURITY)BUDGETS)..............................................................................................................................)1! NEW!DIMENSIONS!IN!NATIONAL!SECURITY!SPENDING!.....................................................................................!1! Figure!One:!A!Key!Uncertainty!in!National!security!Economics:!The!Rising!Number!of!Terrorist! Incidents!Importance!of!InternAl!Security!Expenditures!in!the!MENA!Region:!...................................................!2! REPORTING!ON!DIRECT!DEFENSE,!MILITARY,!AND!NATIONAL!SECURITY!SPENDING!.................................!4! LOOKING)AT)THE)BROAD)TRENDS)IN)MILITARY)SPENDING)AND)NATIONAL)SECURITY) EFFORTS)....................................................................................................................................................)5! TOTAL!REGIONAL!SPENDING!..................................................................................................................................!5! COMPARING!SPENDING!BETWEEN!GLOBAL!REGIONS!........................................................................................!5! TOP!RANKING!MENA!SPENDERS!...........................................................................................................................!6! TRENDS)IN)MILITARY)SPENDING)BY)NATION)AND)SUBREGION)............................................)6! NORTH!AFRICA!..........................................................................................................................................................!6! EGYPT!AND!THE!LEVANT!.........................................................................................................................................!8! THE!GULF!AND!YEMEN!..........................................................................................................................................!10! GCC!VERSUS!IRANIAN!MILITARY!SPENDING!.....................................................................................................!14!
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